I am a Postdoctoral Research Associate at the Faculty of Economics at the University of Cambridge.
In Fall 2022, I will join the Graduate School of Economics at the University of Tokyo as an Assistant Professor of Economics.

Ph.D. in Economics from the University of Pennsylvania.
Field: Macroeconomics and Finance
Contact: hl610
[at] cam.ac.uk


Working papers

Striking While the Iron Is Cold: Fragility after a Surge of Lumpy Investments

In this paper, I argue that synchronized large-scale investments of large firms can significantly amplify productivity-driven aggregate fluctuations and lead to investment cycles even in the absence of aggregate shocks. Using U.S. Compustat data, I show that the years preceding recessions display investment surges among large firms. Furthermore, after the investment surges, large firms become inelastic to interest rates and display persistent inaction duration. I then develop a heterogeneous-firm real business cycle model in which a firm needs to process multiple investment stages for large investments and can accelerate it at a cost. In the model, following a TFP shock, the synchronized timings of lumpy investments are persistently synchronized. And TFP-induced recessions are especially severe after the surge of large firms' lumpy investments. In support of this prediction, I present evidence for the investment cycle in post-shock periods in macro-level data on nonresidential fixed investment.

2022: Bank of England; 2021: SED, MMF, EWMES; 2020: KER International Conference, WEAI, MEA (Cancelled); 2019: FRB San Francisco (Thomas J. Sargent Dissertation Fellowship)

Unexpected Effects: Uncertainty, Unemployment, and Inflation (with Lukas B. Freund and Pontus Rendahl)
Revise & Resubmit at Review of Economic Dynamics

This paper studies the role of uncertainty in a search-and-matching framework with risk-averse households. Heightened uncertainty about future productivity reduces current economic activity even in the absence of nominal rigidities, although the effect is reinforced by the latter. The reason behind the former result is that future asset prices become more volatile and covary positively with aggregate consumption, which increases the risk premium in the present, putting negative pressure on current asset values, and contracts supply. With nominal rigidities, a more uncertain future increases households’ precautionary behavior, which causes demand to contract. Compared to negative demand shocks, uncertainty shocks are less deflationary and render a flatter Phillips curve.

Top Income Inequality and the Business Cycle

This paper studies how the pass-through businesses of top income earners affect the aggregate fluctuations in the U.S. economy. I develop a heterogeneous-household real business cycle model with endogenous labor supply and occupational choice and calibrate the model to capture the observed top income inequality. Compared to the counterfactual economy with the factor-income-driven top income inequality, the economy in the baseline model features the aggregate fluctuations that outperform in explaining the recent changes in the business cycle: 1) lower volatility of aggregate output and 2) stronger negative correlation between labor hour and productivity. Heterogeneous labor demand sensitivities to TFP shocks between pass-through businesses and C-corporations build the core of the aggregate dynamics, and the aggregate employment dynamics display substantial nonlinearity due to this heterogeneity.

Presentation: 2021 AEA/ASSA

Aggregate Uncertainty, Repeated Transition Method, and the Aggregate Cash Cycle

This paper develops and tests a novel algorithm that solves heterogeneous agent models with aggregate uncertainty. The algorithm iteratively updates agents’ expectations on the future path of aggregate states from the transition dynamics on a single path of simulated shocks until the expected path converges to the simulated path. The nonlinear dynamic stochastic general equilibrium is computed with a high degree of accuracy by this method; the market-clearing prices and the expected aggregate states are directly computed at each point on the path without relying on the parametric law of motion. Using the algorithm, I analyze a heterogeneous-firm business cycle model where firms are subject to an external financing cost and hoard cash as a buffer stock up to a target level. Based on the model, I discuss the business cycle implications of the corporate cash holdings.

Work in progress

Rising Intangibles and Technology-Biased Technical Change (with Jesús Fernández-Villaverde)

A Theory of Firm Dynamics under Endogenous Gibrat's Law (with Vasco M. Carvalho)

Rising Intangibles and Fading Listed (with Sara Casella and Sergio Villalvazo) [slides]

Labor Market Impact of M&A and Skill Complementarity (with Minji Bang)